One of the biggest concerns for people considering filing for bankruptcy is the length of time it shows on their credit report. While a valid concern, the better question to ask a bankruptcy attorney is usually what impact does it have on my credit report?
Generally, a Chapter 7 bankruptcy filing will appear on your credit report for ten years from the date of filing. However, the impact that the bankruptcy filing has on your credit report greatly diminishes with every passing year. The impact on a credit report from a Chapter 13 bankruptcy or a Chapter 11 Bankruptcy is a little more complicated because of the typical delay in the entry of discharge.
It may come as a surprise, but for a very large number of individuals, their credit scores are actually higher 12-15 months after the filing of a Chapter 7 bankruptcy then it was prior to filing. In fact, with some basic steps, most of our clients are finding that their credit scores are between 620 and 650 just 18 months after filing for bankruptcy.
By taking some initiative with respect to credit repair, and credit rebuilding, it is entirely possible to have credit scores in the very high 600’s and even
low 700’s in just over two years. While what is considered “A” varies from lender-to-lender, as well as on market conditions, it is generally accepted that a credit score of 680-720 is “A” credit for most people, and this can be achievable for many in just two years.
As bankruptcy attorneys that regularly deal with credit reporting issues, we suggest that our clients check their credit reports with each of the three major credit reporting companies three months after receiving their bankruptcy discharge to confirm that all of the accounts that were part of the bankruptcy reflect that they have been discharged.
After bankruptcy, we also recommend that our clients obtain a secured credit card, and continually pay the balance in full each month, or at least make the minimum payments timely. Once some time has passed, we suggest opening a more traditional credit card, and closing the first one.
While having multiple cards can actually increase your credit score, we generally recommend strongly against that practice, as the use of multiple credit cards is a slippery slope to being in debt again. If you have any questions about credit repair post-bankruptcy, please do not hesitate to ask one of our bankruptcy attorneys .